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Future Of Philanthropy

Meet The Billionaire Philanthropist Placing Big Bets On Early Childhood Development

To J.B. Pritzker, there's no area with as much potential social good upside as early childhood investment.

[Photos: Vladimirs/iStock]

When J.B. Pritzker invests his family's philanthropic dollars, he thinks about it in the same way as his other investments. After all, he's a business guy—one of the Midwest's biggest tech venture capitalists—and he prefers to think of himself as such. "I hate the term philanthropist," he says.

And to Pritzker, there's no area with as much potential upside—socially speaking—as early childhood. In setting up pre-K schools, supporting home visit programs, and looking to technology to aid and support early childhood, there's a possibility of big gains, multiplied through people's lives. Pritzker, the 512th richest man in the world, clearly finds the area awe-inspiring for its possibility.

"When you're someone who cares about making a difference in the world and you have resources to do that, you have literally hundreds of choices you could make about how to do that," he says. "Why was early childhood so attractive? Because, literally, the return on invested dollars in [the] first five years is more than almost every other philanthropic endeavor."

Pritzker, who lives in Chicago, is one of the country's leading investors in early childhood. For example, he's funded the key research of Nobel Laureate economist James Heckman. Heckman, a professor at the University of Chicago, shows that every $1 invested in early education is worth $8 in social benefits, including savings to government service and improved economic potential. Heckman's analysis has made it easier to lobby for and fund early education: the Heckman Equation shows, unsentimentally, that it's better to pay early, rather than later, in people's lives. Together, Pritzker and Heckman are two of the main reasons early childhood is getting more attention on these days.

Pritzker aside, though, investing in early childhood is still at an early stage. "A lot of philanthropists don't know much about it," he says. People who invest in education have tended towards K-12 schooling, and philanthropists, if they have invested in early childhood, have tended to focus on pre-K, rather than early development. The latter is a harder nut to crack from an intervention point-of-view, Pritzker says, and almost certainly a more complicated thing for a philanthropist to think about.

In the past, philanthropists have shied away from "social change" type goals, like early education. The New York-based Bridgespan Group analyzed all philanthropic donations in the U.S. between 2000 and 2012. Just 20% of donations above $10 million went to "social-change organizations," even though 80% of philanthropists in the survey expressed interest in "social change" priorities, like helping people in need or reducing health disparities. Bridgespan's Devin Murphy says there's been a lack of "shovel-ready" projects in early childhood. And the field has carried "more public risk and less public reward than, say, giving to your alma mater, or putting your name on a building."

That's why Bridgespan has put together a report concretizing the opportunities in the space. "Billion Dollar Bets to Increase Early Childhood Development," looks at ways philanthropic capital could intervene—for instance, through better home-screening tools, or supporting technology aimed at the needs of lower-income groups. Bridgespan says one million low-income kids a year are currently not ready for kindergarten when they enter at age five.

"Nationwide, 5.8 million children, from birth to age five, are not on track to succeed when they begin kindergarten, as they lack the necessary cognitive skills, physical development, social and emotional development, language and emergent literacy, and/or learning mindsets required to succeed in a formal learning environment," the report says. "Low-income children often enter kindergarten far behind their peers on more than one of these indicators, making it difficult for them to catch up and stay on track."

The report, part of a series, looks at six "big bets"—or types of investment ideas—philanthropists might focus on. Those include funding better kindergarten-readiness assessments, so service groups can track who and who isn't ready for school. It includes supporting technology like Text4Baby, Ready4K, LENA, and UPSTART aimed at improving "adult-child relationships." And, it includes VC-type investments in early childhood startups, as opposed to funding more conventional non-profits.

There are programs that are working already. The Nurse-Family Partnership, which arranges for nurses to visit low-income first-time mothers, has been been shown to reduce parental neglect and raise educational outcomes. But Bridgespan says it's unlikely such programs could be extended to everyone who needs help. "Reaching the number of families and caregivers required to truly impact social mobility in the United States will require further development and testing of equally effective but less-intensive, lower-cost options," the report says.

That includes Ready for K, which trains mothers to be their child's first teacher, and Text4baby, an app that checks in on baby weights, offers medical updates and tracks doctor's appointments. "We know that just receiving tips via text message, or words of encouragement, especially in that early moment when you're becoming a parent are highly important for changing the behavior of the parents in the care they provide to their children," Murphy says. The report estimates (using the method here) that philanthropic capital could produce social returns worth $5 to $11 for every $1 invested.

Pritzker is particularly interested in the first three years of a baby's life. He says pre-K is "doable," provided the money can be found. The first three years are harder, because you're talking about more private interactions that may, or may not, occur between a parent and child. Research shows 90% of physical brain development occurs in the first three years and that life experiences, particularly the adult/child interaction parts, are highly formative to the "cognitive and social-emotional skills that shape life outcomes."

Pritzker is visiting California in September to speak to the Silicon Valley Community Foundation about early childhood (Mark Zuckerberg, an education investor, has donated a lot of money to SVCF). He hopes to sign up philanthropists/investors who may have shied away from early childhood in the past. "There are many successful startup funders who are looking for ways to make a difference in the world," Pritzker says. "There are thousands of [opportunities] they could choose, but I think people in the tech community understand how early investment can disrupt, so to speak, and significantly improve people's lives."

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